A recent study by Kantar World Panel shows that Windows Phone is catching on significantly. As the market focuses on the overblown Android-iOS tussle, Microsoft Corporation’s (NASDAQ:MSFT) Windows Phone continues to penetrate the U.S. and European markets — where its primary hardware partner, Nokia Corporation (ADR) (NYSE:NOK), is based.
Kantar’s study, which relates to the first three months of 2013, suggests very strong growth for Windows Phone in the U.S. In Q1 2013, Windows Phone gained 1.9% compared with the year-ago quarter. This gain translated into 5.6% of U.S. smartphone sales in the first quarter of the year. The real headline in Kantar’s study is not the significant year on year growth, but the rate at which Microsoft Corporation’s (NASDAQ:MSFT)’s Windows Phone has gained over the first three months of the year. In January 2013, Windows Phone accounted for only 3.2% of U.S. smartphone sales. This later grew to 4.1% in February and later to 5.6% that was documented in the quarter ended March.
What does this growth signal for Nokia Corporation (ADR) (NYSE:NOK)? And more importantly, what is the impetus behind the growth, is it a sustainable force? These are the questions that industry specialists are asking.
Strengthening Nokia’s bid for third place
Microsoft’s growth strengthens Nokia Corporation (ADR) (NYSE:NOK)’s bid for third place. Apple Inc. (NASDAQ:AAPL) and Samsung’s tussle has created a key leeway for fringe players like Research In Motion Ltd (NASDAQ:BBRY) and Nokia. So far, Research In Motion Ltd (NASDAQ:BBRY) has made inroads in Canada and Europe. In fact, naysayers were compelled to go on the defensive after it turned surprise profits of $0.22 per share for Q4 2012, beating expectations which were pegged below the break-even point.
In as much as BlackBerry is making significant inroads, its market share in the U.S. does little to vindicate its hard work. If anything, Microsoft’s Windows Phone is gaining at a higher rate than Research In Motion Ltd (NASDAQ:BBRY). Kantar’s research reveals that the latter only accounted for 0.9% of U.S, sales in the quarter ended March. With the odds evidently skewed toward Microsoft Corporation’s (NASDAQ:MSFT)’s operating system, Nokia Corporation (ADR) (NYSE:NOK)’s chances couldn’t be any better.
The big question, as stated earlier, however remains; What is the impetus behind the growth, and is it sustainable? The force behind Microsoft’s uptrend is the fact that its operating system provides an entirely different experience when compared with iOS and Android. In addition, BlackBerry isn’t exactly new to the market. Because of the need to get something entirely new, a section of consumers are tending toward Microsoft’s Windows Phone. And as the argument for a third ecosystem continues to gain momentum, Windows Phone — because of its relative ‘newness’ to the market — continues to secure a more solid footing compared with BlackBerry.
One of the key pillars in the contemporary tech industry is innovation. Microsoft’s operating system does a lot to enhance this and with time, will gain the spotlight. In my opinion, this growth will hold moving forward. As long as Nokia remains Microsoft’s primary partner, its flagship Lumia model will gain immensely.
Conclusion
Verizon is set to get the Lumia 920 very soon. Being the top smartphone seller in the U.S., Verizon offers a lot of marketing support for its handsets. The Lumia will not only gain from this support, but it will also reach a wider market base.
While Nokia Corporation (ADR) (NYSE:NOK)’s share price does little to reflect its prospects, an uptrend is very likely; especially so after understanding the impact that Microsoft’s success will have on its sales. Nokia Corporation (ADR) (NYSE:NOK) is a good target for growth investors looking to invest for the long haul.
Lennox Yieke has no position in any stocks mentioned. The Motley Fool owns shares of Microsoft.
